News Analysis: Acquires Radian6 For $316M

Published on March 30, 2011 by R "Ray" Wang Bets Big On Social Media Monitoring And Socialytics

Salesforce’s definitive agreement to acquire Radian6 continues the consolidation of 100’s of social software vendors in the marketplace.  Radian6, a social media monitoring and customer engagement platform, provides tools for companies seeking to harness the power of social media and related social networks.  Most customers utilize Radian6 for brand management and monitoring, sales and lead generation, Social CRM (SCRM), customer service, competitive intelligence, trend analysis, and crisis management.

The company’s focus on the enterprise has paid off with over half of the Fortune 100 deploying Radian6’s products and 1700 customers worldwide.  Marquis customers include AAA, Dell, GE, Kodak, Molson Coors, Pepsico, and UPS.  The deal represents a $256M cash and $50M stock offer.  The following is a first take analysis of how envisions applying the assets of Radian6 for its customers to:

  • Bring social analytics or socialytics to the offerings. Sales and Service Cloud will gain new capabilities in social media monitoring and engagement.  Today’s companies seek the tools to bring social customer strategies with existing CRM processes and organizational structures. A social media monitoring and engagement platform provides a critical tool for success in Social CRM (SCRM).

    Point of View (POV):
    While this acquisition does not solve the lack of a good analytics platform in today, a Radian6 acquisition delivers social analytics or socialytics capabilities for customers.  Social media monitoring delivered by Radian6 provides the first step in the journey to engaging customers in social channels.  Advanced users often find they need to couple a sentiment analysis tool such as Clarabridge, Lymbix, SPSS, or Textlytics to improve accuracy. 

    Because customers have proven to be more cutting edge in adopting disruptive technologies, natural synergies will emerge among these CRM pioneers.  Whether can build an SCRM solution in parallel remains the bigger question.

  • Apply learnings to the platform. hopes its developers will build new products using the Radian6 platform.  The intent is to add social elements into future products.

    POV: currently lacks the social graph required to build social software.  Learnings from Radian6 should help the team identify the key additions to the platform required to enable social software development.  Developers can expect these offerings to take at least 9 to 12 months to be incorporated into the platform.  More middleware components will be required in the long run.
  • Build a bridge from Chatter to public social networks. Chatter today remains within the closed walls of the sees opportunities to apply Radian6’s engagement platform to expand the capabilities of Chatter.  Expansion into public social networks opens new insights into the enterprise.

    Users seek feeds from Facebook, Twitter, YouTube, LinkedIn, and other social media.  Radian6’s engagement platform can quickly be applied to expand Chatter.  The integration will remove a key deficiency with Chatter, an inward only focus.  However, will have to ensure that the offering meets enterprise class standards and addresses the challenge of information overload in activity streams.

The Bottom Line: Going After The Five Pillars Of Consumer Technologies For has built from its base in the Cloud and expanded into Mobile and Social.   Marc Benioff’s strategy reflects bets on the five pillars of consumer tech entering the enterprise..  While this acquisition does not solve the lack of a good analytics platform in today, a Radian6 acquisition delivers social analytics or socialytics for customers.  The only key pillar missing in its acquisition strategy is unified communications and video.  One can expect this pillar to be hot on the medium term acquisition short list.

Meanwhile, has proven to be quite successful at integrating acquisitions.  Customers can expect most of the team including R&D, service and support, marketing, and sales teams to remain in tact.  Despite any reassurances received during the acquisition, customers of Radian6 should take the following actions:

  • Review existing contracts and lock-in beneficial terms and conditions. Have your contract reviewed and identify areas where you may have a special arrangement.  Work with Radian6 to begin an early renewal in the maintenance contracts to secure terms and sweetheart deals for the next 3 to 5 years.
  • Secure feature requests and product enhancement promises in writing. Expect the team to be distracted over the next 3 to 6 months with post merger integration.  Best to get guarantees in writing so that product roadmaps contain key feature commitments.
  • Attend Radian6 Social 2011. The announcement comes a week prior to Social 2011, Radian6’s user event and unconference.  Users can expect more information to come first hand at the event and perhaps a guest appearance by Marc Benioff.  If you haven’t registered, please do so now.  Now’s the time to get face time with key execs. (Note as of 3/30/2011 has confirmed Marc will be at Dreamforce Paris)

Your POV.

Radian 6 users, do you think your better off under or remaining independent.  Are you already a user and working with Radian6?  How’s your experience to date?  Do you think can continue the momentum at Radian6?  Do you think $316M is overvalued?

Please post or send on to rwang0 at gmail dot com or r at softwareinsider dot org and we’ll keep your anonymity.

Related Resources And Links

20110330 IDG News Service – Chris Kanaracus “Update: buys social media monitor Radian6”

20110330 ReadWriteEnterprise – Klint Finley “ Acquires Radian6: Are Business Ready for the Social Data Firehose?”

20110330 ZDNet S0cialCRM: The Conversation – Paul Greenberg “ Acquires Radian6: The Uber Move Continues”

20110330 Information Management – Valerie Valentine “Radian6 to be acquired by”

20110330 Voices of CRM / – Barney Beal “ to acquire social media monitoring provider Radian6”

20101208 Software insider – R “Ray” Wang “News Analysis: Buys Heroku For $212M – Shows Commitment To Next Gen Apps”

20100429 SoftwareInsider – R “Ray” Wang “News Analysis: and VMware Up The Ante In The Cloud Wars With VMforce”


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Copyright © 2011 R Wang and Insider Associates, LLC All rights reserved.

  • […] Acquires #Radian6 For $316M While this acquisition does not solve the lack of a good analytics platform in today, a Radian6 acquisition delivers social analytics or socialytics capabilities for customers. Social media monitoring delivered by Radian6 provides the first step in the journey to engaging customers in social channels. Advanced users often find they need to couple a sentiment analysis tool such as Clarabridge, Lymbix, SPSS, or Textlytics to improve accuracy. […]

  • I agree with your analysis Ray. I always enjoy reading your take on acquisitions.

    How can continue to pay seemingly high multiples for companies like Radian6 and Heroku?

    Taking a closer look at the Radian6 deal, they are paying ~186k per customer! I don’t think’s business issue is acquiring customers, especially only 1,700 from Radian6. They acquire 4k to 5k customers every quarter already. They need to find away to increase profitability and EPS.

    In the Heroku deal, they paid a healthy premium for a company that generates a relatively small amount of revenue. Their strategy here makes sense though, attract developers to build on your platform(s), distribute their applications through multiple channels (AppExchange, direct, partners, etc.), and earn high margin OEM / ISV subscription fees. The question is how long will it take to start earning an ROI on the Heroku acquisition?

    Also, how sustainable are Radian6 and its competitor’s revenue streams? There are new players coming into the broadly defined Social CRM market with relative ease and the larger CRM players will start to offer more social media, listening engine, sentiment, and data filtering capabilities with their solutions.

    I read through a handful of tweets on the Radian6 acquisition and noticed some responses from customers who want them to focus more on improving existing CRM features, such as analytics, marketing automation, and workflow.

  • Ray, thanks for the post!

    Clearly consumers don’t particularly want a social relationship with a brand or an organisation – what they want are the BENEFITS that such a relationship might bring them.

    Being able to apply brand/customer/competitor and partner social research using tools like Radian6 will provide salesforce customers the ability to better strategize/engage their customers and partners alike.

    Keep those POV’s coming! Michael

  • Umbreto – good points on innovation. SFDC is starting to slow down on innovations and becoming a fast follower. A natural sign of software vendor maturity. A good post o read is Paul Greenberg’s on culture. There will be a culture clash. Let’s see if they can keep Radian6’s innovative startup environment w/o the politics of a large firm. – Ray

  • Ray,

    I’m not sure SFDC was ever a product innovator. Besides chatter (which some would argue is a yammer replica), I can’t think of any recent innovations (and even the original product was a easier/cheaper riff on existing SFA).
    I think their strength is in market vision and thought leadership, less so in product innovation.
    I think the recent acquisitions are an attempt to bring more product innovation in-house, and both Heroku and Radian6 clearly showed a knack for creativity.

    I think an interesting question is whether will keep a vibrant ecosystem, where third parties have a fair opportunity to bring innovation to customers even in areas where has its own offering. If the AppExchange promise remains alive, customers will continue to have alternatives in case isn’t able to keep the social media monitoring innovation alive.

  • Clive – Appreciate the loyal following and compliiment. The question I pose out to readers ” Do all these acquisitions mean SFDC no longer knows how to innovate on its own?” – Ray

  • Eugene – Marc’s betting the farm on this. Let’s hope he can integrate the cultures as these companies are all very different and SFDC is really a younger version of an urbanite Oracle when it comes to internal culture. What do others think? – Ray

  • Agreed. Brilliant analysis. (Ray & Co are cutting edge on enterprise consumerization)

    Building a Bridge from Chatter to the public social networks looks easy, but bridging the closed enterprise security model with the public model is where the rubber meets the road.

    Evolving the security model space, to allow consumer internet scale, will be SFDC’s golden egg.

  • Technically this acquisition seems sound. But financially, with SFDC spending 50% of its cash assets with this buy and starting the year in negative cash flow, I think SFDC is making a big bet here. It’s clear that SFDC’s growth strategy is through acquisitions. Dimdim for $22M cash, Heroku for $212M cash, now Radian6 for $256M cash (+$50M in stocks). It’ll definitely be interesting to see how SFDC handle the influx of new customers, new employees, and new technologies.

  • Lauren, thanks for the comments. looking forward to more details at Social 2011 – Ray

  • Brilliant initial analysis, Ray. You are spot on about there still being a lot of questions alongside opportunity. As we learn more, we will keep the community informed. Nothing has changed about our engagement strategy. We are gathering feedback and will respond. Thank you for giving some great pointers and asking the tough questions. It is because of folks like you, that we are able to push forward in this space. Thank you.

    Lauren Vargas
    Director of Community at Radian6

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